Legislature Recommends N50 Billion Lifeline For Airlines

Yemisi Izuora 

The House of Representatives Committee on Aviation has recommended a bail out fund of  fifty billion naira for airlines operating in the country.

The Committee Chairman,  Nnolim Nnaji, addressing the media also advised Federal Government to allow aviation agencies to retain 25 per cent  of their Internally generated revenue, for infrastructure development.

According to Nnaji, The Aviation sector requires huge capital for infrastructural development. The remittances of 25% of their internally generated revenues(IGR), should be retained for the next ten years, to help the agencies upgrade their facilities.

“The federal government’s N4blllion bailout to the airlines and some palliatives to the agencies (not yet released), is too small. The airlines needs at least N50billion bailout funds, to cushion the Corona virus effect”, he stated.

The Committee expresses the concern that if urgent rescue steps are not implemented the imdustry may face serious challenges.

“We are requesting that other mechanisms should be introduced as a support, to avert the collapse of the Aviation sector. We intend to interact with the leadership of The National Assembly and the Ministry of Aviation In all the concerns raised by the operators and other sundry issues confronting the industry, to see how we can address them, to avert the collapse of the industry.

“it is important that the Federal government urgently comes to the aid of the operators by addressing these needs in the overall interest of the national economy to relieve the airline operators of frustration as well as their threat of shutting down their operations, due to lack of funds and harsh operating environment”, he said.

The Committee further observed that the sector’s contribution to the economy, was too enormous to allow it fail.

“In 2019, the contribution aviation made to national economy, is through its impact on the performance of other sectors and as a facilitator of their growth. The industry is the tonic on which many other sectors depend on. Unfortunately, this vital sector that acts as stimulus to the rest of the sectors of the economy is facing extinction, the consequences of which will be very detrimental to the overall economy of the country, if not squarely addressed immediately.

“In 2019, the contribution of the aviation industry to the nation’s Gross Domestic Product(GDP), was put at N198.62billion according to the release from the National Bureau of Statistics, (NBS). In fact, aviation was adjudged the fastest growing sector for the 2019, despite the harsh operating environment. This was projected to be surpassed in 2020, but for the advent of Corona virus pandemic, which has dealt a devastating blow on the industry”.

According to him, “before the outbreak of COVID-19, the industry, especially the airlines were already crying for intervention from the government to help them surmount the various challenges confronting them. The public hearing we held for the 6 aviation bills, between November 17 and 19, provided the ample opportunity for the indigenous airline operators to voice out their problems, which we believe should not be treated with levity, if we must move the industry and the economy forward.

“The operators listed the challenges, which they claimed have been crippling their operations as follows: non-implementation of Executive Order on Zero Customs Duty and zero VAT on importation of Commercial Aircraft and Aircraft spare parts, non-implementation of the Executive Order on the removal of VAT from Air Transportation, inability to access foreign exchange, high cost of capital and lack of single digit lending interest rate for airlines, replacement of NCAA’s 5 per cent  Ticket Sales Charge(TSC), with fixed charge similar to FAAN passenger service charge(PSC), multiplicity of taxes, fees and charges, urgent review of NAICOM Act on Aviation Insurance and exceptional permission grant, the externalizations of insurance placements for domestic airlines in the country on an exceptional basis,in the interest of air transport safety, due to inability of Nigerian Insurance Companies, to cover aviation risks, multiple entries and multiple frequencies granted to foreign airlines and depletion of domestic airline market with loss of jobs, unnecessary delays for weeks in clearing of AOG spare parts for aircraft, high operating cost(continually rising cost of JetA1), ease of doing business, over Regulation of Domestic Airlines and inadequate night landing facilities in most of the airports thereby affecting the operating flight hours daily”.

He said the Committee will “look into these demands and more especially to find out why the Nigeria Customs Service, would not respect President,s Executive Order on duty exemption and other palliatives meant to lighten the burdens of the airlines”.

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